Summary

  • The Punta Cana airport will be expanded as part of a $280 million project that includes free trade zone facilities.
  • The airport is privately operated as part of an international resort and property development.
  • The country’s president sees the expansion as a catalyst for new private sector investment, but with reservations.
  • The expansion of the terminal will include a pre-clearance checkpoint for U.S. Immigration and Customs Enforcement, which will further enhance the country’s economic importance.
  • Tourism is on the rise again, especially from North America.
  • COVID restrictions have been relaxed.

The $280 million expansion project will include a free zone logistics center

The government of the Dominican Republic recently announced the launch of the $280 million Punta Cana International Airport expansion project. The initiative includes the construction of the 265,518 m² logistics center of the Punta Cana Free Zone and the extension of Terminal B to 25,000 m².

Punta Cana is considered the most visited Caribbean vacation destination.

The logistics center will include a cargo hub, MRO facility and fuel production capabilities, while the expanded terminal will include seven gates with air bridges, with a capacity to handle three million passengers per year. $80 million is earmarked for the expansion of the terminal, which is scheduled for completion in November 2022.

Together, the expansion of the terminal and the construction of the logistics center are expected to generate 7,000 new jobs.

Presidential advocacy for new private investment is anchored on the success of Punta Cana’s “commercial private” airport

In a speech at the airport, President Luis Abinader Corona reiterated a previous call for domestic and foreign investors to invest in the Dominican Republic in general, and affirmed that the government “will support projects that improve the quality of life for all Dominicans, as long as they respect the laws and the Constitution of the country. It’s unclear exactly what that ambiguous comment meant, but the country has suffered from drug trafficking and money laundering-related corruption in recent years, with government officials implicated.

He added: “I repeat that now is the time to invest in the Dominican Republic. Today I say it with much more certainty and security. Today is the best time to invest in the Dominican Republic. countries. Today, we are open to investments to create jobs, to improve each of our services and promote each of our sectors”.

He pointed out that record investments were coming into the country, and that with this new project “we are at the forefront of the logistics sector…it is one of the most important infrastructure works and will project the Dominican Republic as a first-class international”. logistics hub.

A major regional gateway and operated as a private gateway primarily to support a resort area

The airport is one of the main gateways to the Dominican Republic, handling 7.1 million passengers in 2019. The other main international gateway is Santo Domingo’s Las Américas Airport, with four million passengers the same year.

Punta Cana is considered “the first private commercial airport in the world”, which means that it is operated by Grupo PUNTACANA – a partnership created to build a resort and real estate community.

The PUNTACANA Resort & Club has grown to encompass more than 26 square miles (42 km²) and most recently includes Punta Cana International Airport under a build-operate-transfer concession.

Prior to these projects, the last major expansion was undertaken at the airport to add modern technology and improve facilities beginning in 2009 when a new check-in section of Terminal 1 was completed.

In 2011, the airport opened its new 10,170-foot runway, with the same proportions as the existing one, and its control tower with other works, including the expansion of existing taxiways and the construction of a new traffic lane.

Industry and Trade Minister Ito Bisonó said: “What begins today is the result of a great vision of years of work by the Punta Cana Group, which met with an administration (this is that is) devoted body and soul to making the right decisions, without bureaucracy, generating confidence, national and international, of investors who see the Dominican Republic with new eyes”.

He added that this logistics center will take advantage of the connectivity that exists today with some 300 cities around the world connected from the international airport of Punta Cana, with a free zone, an aircraft repair and maintenance center and a fuel center.

The Punta Cana Free Trade Zone (PCFTZ), from its Air Logistics Center, will handle the import, export, transshipment and freight of packages on a site of 265,518 m² and 75,000 m² of construction, thereby consolidating the process of cargo operations on passenger aircraft. It will have a “Free Zone Park” which will promote the manufacturing industry.

Punta Cana Group President and CEO, Frank Elías Rainieri, expressed his opinion that the group has been true to a commitment to work for the economic and social progress of the country and continues to consider more such options. for the future .

Terminal expansion will include a U.S. Immigration and Customs Enforcement pre-clearance checkpoint

He also added that “Terminal B will be ready to receive the United States Immigration and Customs Enforcement pre-clearance service, which we are sure will be approved because of the competitive advantages it offers to the Dominican Republic as a tourist and investment destination”.

U.S. Customs and Border Protection has 16 preclearance sites in six countries, including Aruba, Freeport and Nassau in the Bahamas. The addition of Punta Cana will give it an advantage over other airports in the region in that it will allow business people to settle there and easily enter the United States when needed.

A fast-growing economy but with strong income inequalities

Over the past two decades, the Dominican Republic has been one of the most dynamic economies in Latin America.

The economy has rebounded from the global recession of 2010-2016 and the fiscal situation is improving. A package of tax reforms, cuts in public spending (hence the president’s call for the private sector) and lower energy costs have helped reduce the central government’s budget, and public debt is falling .

However, income inequality and the unemployment rate are still high; this and underemployment remain significant long-term challenges. The poorest half of the population receives less than a fifth of GDP, while the richest 10% receive almost 40% of GDP.

In addition, the economy is heavily dependent on the United States, the destination of approximately half of exports and source of 40% of imports. Remittances from the United States amount to about 7% of GDP and are equivalent to about one-third of exports and two-thirds of tourism receipts.

To act as a cargo hub for the region, Punta Cana is arguably as well placed as Puerto Rico, the US territory next door (just 50km to the east).

Luis Muñoz Marín International Airport is also privately operated there – effectively as a PPP – by Aerostar Holdings, and there are already many free trade zones there, so strong opposition can be expected. .

Tourism, especially North American, is on the rise again

The fact that one of a country’s main airports can not only be privatized (Santo Domingo Las Americas International Airport also belongs to VINCI Airports) but to an organization whose sole modus operandi is tourism and real estate , is indicative of how important tourism is in the Dominican Republic.

The graph below represents tourism growth from 2010 to 2022 and shows that it has been constant each year from 2010 to 2018, varying between +2.8% and +9.6%.

As with many other countries, it slowed down to negative numbers in 2019. 2020 saw a sharp COVID-related decline of -63%, but 2021 rebounded with a 107% gain, and in the first two months by 2022, it was +113%.

COVID restrictions eased

Part of the reason for the rapid return to the 2019 figure is that the Dominican Republic, like many other countries in the region, was a bit more lax on entry requirements during the peak of the COVID-19 outbreak. and was quickly dropping entry restrictions. As of March 8, 2022, “COVID Passports” are no longer required to enter from anywhere.

From a peak of over 7,000 reported cases per day in mid-January 2022, there were 126 on March 8, 2022.

The majority of visitors come from the United States and the ratio has changed little over the past three years.

In 2019, it was 33.9%; in 2020 29.5%; and in 2021 33.1%. No other country got more than 3.7% of the total in 2021, and that country was Russia – there will be considerably fewer of these arrivals for the foreseeable future.

As COVID restrictions begin to ease in the United States, combined with the easing in the Dominican Republic, this will provide a strong boost to the outlook for Punta Cana airport.

The graph below shows how seat capacity, which has operated at 2019 levels year to date, has exceeded those levels since late February 2022 in Punta Cana.

All bases covered

The capacity measured by airline is once again indicative of the importance of the North American market. The Dominican Republic does not need a flag carrier (Dominicana ceased operations in 1999) as five of the top 10 airlines operating in Punta Cana by this measure are American and three are Canadian.

As these markets return, there is great promise for the resurgence of tourism, upon which the Punta Cana airport relies.

In addition, there is an almost ideal mix at the airport between full service, low cost and charter capacity, and between “non-aligned” carriers and those belonging to the three main alliances, which are also represented.

For a country that is so closely tied to the sport of baseball (it has the second highest number of players by nationality in the U.S. Major League), it can be said with certainty that with these expansion plans, the Punta Cana has all the bases covered.

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